nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒07‒17
twenty-one papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Unregistered Firms, Financial Access and Innovation By Sam Z. Njinyah; Simplice A. Asongu
  2. Impact of innovation and exports on productivity: are there complementary effects? By Petković, Saša; Rastoka, Jelica; Radicic, Dragana
  3. Technology, Innovation, and Firm Competitiveness: Firm Level Analysis in Cambodia By Hing, Vutha; Thangavelu, Shandre M.; Kong, Ratha
  4. Techies and Firm Level Productivity By James Harrigan; Ariell Reshef; Farid Toubal
  5. Skills Shortage and Innovation Openness By Paolo Carioli; Dirk Czarnitzki
  6. Mapping Innovation Support Programmes for Micro, Small and Medium Enterprise Development: Findings from Nepal By Dikshya Singh; Paras Kharel
  7. War and Entrepreneurship: A Synthetic Control Study of the Russia-Ukraine Conflict By David B. Audretsch; Paul P. Momtaz; Hanna Motuzenko; Silvio Vismara
  8. Gender, Entrepreneurship and Coping with the COVID-19 Pandemic: The Case of GoFood Merchants in Indonesia By Elhan-Kayalar, Yesim; Sawada, Yasuyuki; van der Meulen Rodgers, Yana
  9. China’s quest for innovation- progress and bottlenecks By Alicia García-Herrero; Robin Schindowski
  10. COVID-19, Innovative Firms and Resilience By Michele Battisti; Filippo Belloc; Massimo Del Gatto
  11. Pandemic effects: do innovation activities of German firms suffer from Long-COVID? By Markus Trunschke; Bettina Peters; Dirk Czarnitzki; Christian Rammer
  12. Perceived university support and environment as a factor of entrepreneurial intention: Evidence from Western Transdanubia Region By Attila Lajos Makai; Tibor D\H{o}ry
  13. Intuit QuickBooks Small Business Index: A New Employment Series for the US, Canada, and the UK By Ufuk Akcigit; Raman Chhina; Seyit Cilasun; Javier Miranda; Eren Ocakverdi; Nicolas Serrano-Velarde
  14. Technological capabilities and the twin transition in Europe: Opportunities for regional collaboration and economic cohesion By Bachtrögler-Unger, Julia; Balland, Pierre-Alexandre; Boschma, Ron; Schwab, Thomas
  15. Who creates jobs with broad skillsets? the crucial role of firms By De Marzo, Giordano,; Mathew, Nanditha,; Sbardella, Angelica,
  16. From Startups to Global Enterprises: Exploring the Role of Entrepreneurship, Marketing, Internet of Things, and Artificial Intelligence By Moore, Bradley Adam
  17. Accelerating Growth: Unleashing the Power of Accelerator Programs as Strategic Investments for Startups in Pakistan By Tanweer, Syeda Zainab; Shah, Muhammad Saud; Nabi, Agha Ammad; Mukhi, Aftab Ali; Ahad, Muhammad
  18. Do micro-enterprises ask for local support measures? Evidence after the COVID-19 pandemic By Alessio Tomelleri; Anna Gloria Billé
  19. How Do Firms Choose Between Growth and Efficiency? By Laurent Frésard; Loriano Mancini; Enrique J. Schroth; Davide Sinno
  20. Labour costs and the decision to hire the first employee By Cockx, B.; Desiere, Sam
  21. Smart-Green Industrial Complexes: Policy Analysis and Implications By Choi, Junseok; Lee, Juneyoung

  1. By: Sam Z. Njinyah (Manchester Metropolitan University, UK); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The purpose of this paper was to examine the relationship between a firm starting operation informally and its future innovation and whether this relation is moderated by institutional support (having access to finance from financial institutions to run their business).Data from the World Bank Enterprise Survey on 30 Eastern European and Central Asian countries were analysed using probit regression analysis. The findings show that there is a positive significant relationship between firms that start operation informally and the firm’s innovation and that such effect persists overtime. The study found that this relationship is stronger if the firms can gain access to finance to expand their business activities. Finally, the results show that such a relationship is based on the type of innovation being pursued by the firm. By examining the moderation effect of access to finance on starting a business informally, the study provides an alternative explanation to policymakers on how to deal with informal firms to benefit from their contribution to growth.
    Keywords: Informality/unregistered firms, innovation, institutions, Eastern European and Central Asian countries
    Date: 2023–01
  2. By: Petković, Saša; Rastoka, Jelica; Radicic, Dragana
    Abstract: The relationship between firms’ exports and increases in productivity is generally regarded as positive. While the causal effects of process innovation are straightforward and positive, the effect of product innovation on productivity is ambiguous. However, there is a lack of empirical evidence on a joint effect that innovation and exports have on firms’ productivity. In our attempt to fill this gap, we explore individual and joint effects of innovation and exports on productivity by employing cross-sectional firm-level data. We use the sixth wave of the Business Environment and Enterprise Performance Survey (BEEPS VI: 2018–2020) conducted by the EBRD and the World Bank. Using a stratified random sampling, the data was collected from interviews with representatives of randomly chosen firms from 32 countries. The overall results suggest that exporting firms are more productive than non-exporters, while the impact of innovation is more heterogeneous. Whereas EU and high-income countries reap the productivity benefits, this effect is absent in other regions and countries with medium and low-income levels. Finally, our results indicate the absence of a joint effect of innovation and exports on productivity, across different geographical regions and countries of different income levels.
    Keywords: exports; innovation; labor productivity; learning-by-exporting (LBE)
    JEL: R14 J01
    Date: 2023–04–25
  3. By: Hing, Vutha (Asian Development Bank Institute); Thangavelu, Shandre M. (Asian Development Bank Institute); Kong, Ratha (Asian Development Bank Institute)
    Abstract: We examine the innovation and competitiveness of firms, especially with regard to the channels of technology transfer and the nature of innovation activities that influence firm performance in Cambodia's economy. Despite the growing importance of innovation, there has been no empirical analysis of the factors affecting technological and innovative development and the impact that these factors have on firms’ productivity in Cambodia. We use the World Bank Enterprise Survey for Cambodian enterprises for our empirical implementation. The results of the research indicate that overseas linkages that include both upstream and downstream activities could affect productivity growth at both firm and industry levels. We also find that technology and innovation have a positive impact on the productivity of firms in Cambodia.
    Keywords: technology; innovation; productivity; human capital; export and import
    JEL: D24
    Date: 2023–01
  4. By: James Harrigan; Ariell Reshef; Farid Toubal
    Abstract: We study the impact of techies—engineers and other technically trained workers—on firm-level productivity. We first report new facts on the role of techies in the firm by using French administrative data and unique surveys. Techies are STEM-skill intensive and are associated with innovation, as well as with technology adoption, management, and diffusion within firms. Using structural econometric methods, we estimate the causal effect of techies on firm-level Hicks-neutral productivity in both manufacturing and non-manufacturing industries. We find that techies raise firm-level productivity, and this effect goes beyond the employment of R&D workers, extending to ICT and other techies. In non-manufacturing firms, the impact of techies on productivity operates mostly through ICT and other techies, not R&D workers. Engineers have a greater effect on productivity than technicians.
    JEL: D2 D24 O3 O33
    Date: 2023–06
  5. By: Paolo Carioli; Dirk Czarnitzki
    Abstract: Skills shortage has become a key policy issue in highly developed and innovationoriented economies, with non-negligible consequences on firms’ innovation activities. We investigate the effect of skills shortage on firms’ innovation openness, which is considered to be one of the key drivers of innovation performance. We hypothesize that scarcity of personnel causes firms to cooperate more broadly with external partners. Using cross-sectional data from the German contribution to the Community Innovation Survey (CIS), and exploiting detailed information on the extent to which firms could fill their job vacancies, we find that, on average, a one standard deviation increase in skills shortage more than doubles a firm’s cooperation breadth. We contribute to the literature on human capital in relation to open innovation by characterizing the necessity of openness as a way to mitigate the scarcity of skills.
    Keywords: open innovation, R&D collaboration, skills shortage
    Date: 2023–05–29
  6. By: Dikshya Singh (South Asia Watch on Trade, Economics and Environment); Paras Kharel (South Asia Watch on Trade, Economics and Environment)
    Abstract: Challenges facing micro, small and medium enterprises (MSMEs) have led to a proliferation of innovation support programmes in Nepal. This study examines the innovation support landscape in Nepal, describing existing policies and major innovation support programmes for MSMEs, presenting stakeholders’ views on the same, examining the availability of credible empirical evidence on the effectiveness of these policies and programmes, and identifying whether and to what extent they take into account equit , diversity and inclusion considerations. The study has a special focus on the support available to growthoriented startups and export promotion.
    Keywords: innovation, entrepreneurship, market development, private sector, government policies, SMEs, support programs, stakeholder mapping, key informant interviews, and literature review.
    Date: 2023–06
  7. By: David B. Audretsch; Paul P. Momtaz; Hanna Motuzenko; Silvio Vismara
    Abstract: Entrepreneurs are often situated in extreme environments characterized by violent conflict. Yet, war is largely a blind spot in entrepreneurship scholarship. As a first step to closing this gap, we offer a well-identified synthetic control study of entrepreneurial dynamics in the Russo-Ukrainian war. Relative to the synthetic counterfactual, Ukraine’s number of self-employed dropped by 20%, and the number of Ukrainian SMEs temporarily dropped by 14% but recovered within five years of the start of the conflict. In contrast, Russia had lost more than 1.4 million SMEs (42%) five years into the conflict. The disappearance of entrepreneurs is driven by both fewer new SMEs created and more existing SME closures. To pave the way for systematic scholarship on “war and entrepreneurship, ” our study proposes a conceptual framework integrating conflict into the theory of entrepreneurial choice and suggests numerous avenues for future research.
    Keywords: entrepreneurship, war, Russia-Ukraine conflict
    JEL: D74 L26 N44 O17
    Date: 2023
  8. By: Elhan-Kayalar, Yesim (Asian Development Bank Institute); Sawada, Yasuyuki (Asian Development Bank Institute); van der Meulen Rodgers, Yana (Asian Development Bank Institute)
    Abstract: We examine business performance and crisis mitigation strategies among micro-, small-, and medium-sized enterprises (MSMEs) in Indonesia during the COVID-19 pandemic. We utilize a new primary data set based on administrative records, survey data, and follow-up interviews with merchants using the digital application GoFood, an on-demand cooked food delivery service. Three empirical findings emerge: First, the overall employment size of women-owned businesses shrank more than men-owned businesses after the pandemic outbreak; second, women were more likely than men to cut personal expenditures and use government assistance as crisis mitigation strategies; and third, competition increased sharply as new merchants entered the platform, with service areas of both incumbents and entrants shrinking over time. These results have implications for policies on women’s entrepreneurship, the uptake of business development services, and financing programs for MSMEs.
    Keywords: women; e-commerce; COVID-19; digitalization; MSMEs
    JEL: J16 J21 L11 O12
    Date: 2022–12
  9. By: Alicia García-Herrero; Robin Schindowski
    Abstract: We identify three potential bottlenecks that might be hindering the translation of China’s innovation efforts into productivity growth.
    Date: 2023–06
  10. By: Michele Battisti; Filippo Belloc; Massimo Del Gatto
    Abstract: This paper explores the empirical association between patents and various indicators of firm resilience during the COVID-19 pandemic with worldwide firm-level data from manufacturing industries. The study shows that patent-intensive firms have a reduced probability of exit, in particular if they are larger and if engaging with complementary investments in R&D and other intangibles. Additional estimates show that firm productivity has been an important transmission channel. Taken together, the results presented in the paper offer evidence-based findings pointing to patents as an important potential factor contributing to firm resilience during the COVID-19 pandemic. Policy insights are discussed.
    Keywords: Firm resilience, patents, productivity, COVID-19
    JEL: D20 L60 O30
    Date: 2023–02
  11. By: Markus Trunschke; Bettina Peters; Dirk Czarnitzki; Christian Rammer
    Abstract: The COVID-19 pandemic has affected firms in many economies. Exploiting treatment heterogeneity, we use a difference-in-differences design to causally identify the shortrun impact of COVID-19 on innovation spending in 2020 and expected innovation spending in subsequent years. Based on a representative sample of German firms, we find that negatively affected firms substantially reduced innovation expenditure not only in the first year of the pandemic (2020) but also in the two subsequent years, indicating ’Long–Covid’ effects on innovation. In 2020, innovation expenditure fell by 4.7% due to the pandemic. In 2022, innovation spending was even 5.4% lower compared to the counterfactual scenario without the pandemic. Firms with higher pre-treatment digital capabilities show higher innovation resilience during the pandemic. Moreover, COVID-19 leads to a decrease in innovation spending not only in firms that were strongly negatively affected by the pandemic, but also in those firms that experienced a positive demand shock from the pandemic, presumably to increase production capacity.
    Keywords: COVID-19, innovation, difference-in-differences, economic crisis, resilience
    Date: 2023–05–29
  12. By: Attila Lajos Makai; Tibor D\H{o}ry
    Abstract: The exploration of entrepreneurship has become a priority for scientific research in recent years. Understanding this phenomenon is particularly important for the transformation of entrepreneurship into action, which is a key factor in early-stage entrepreneurial activity. This gains particular relevance in the university environment, where, in addition to the conventional teaching and research functions, the entrepreneurial university operation based on open innovation, as well as the enhancement of entrepreneurial attitudes of researchers and students, are receiving increased attention. This study is based on a survey conducted among students attending a Hungarian university of applied science in Western Transdanubia Region who have demonstrated their existing entrepreneurial commitment by joining a national startup training and incubation programme. The main research question of the study is to what extent student entrepreneurship intention is influenced by the environment of the entrepreneurial university ecosystem and the support services available at the university. A further question is whether these factors are able to mitigate the negative effects of internal cognitive and external barriers by enhancing entrepreneurial attitudes and perceived behavioural control. The relatively large number of students involved in the programme allows the data to be analysed using SEM modelling. The results indicate a strong covariance between the perceived university support and environment among students. Another observation is the distinct effect of these institutional factors on perceived behavioural control of students.
    Date: 2023–06
  13. By: Ufuk Akcigit (University of Chicago); Raman Chhina (University of Chicago); Seyit Cilasun (TED University); Javier Miranda (Halle Institute for Economic Research, and Friedrich-Schiller University Jena); Eren Ocakverdi (Independent Researcher); Nicolas Serrano-Velarde (Bocconi University)
    Abstract: Small and young businesses are essential for job creation, innovation, and economic growth. Even most of the superstar firms start their business life small and then grow over time. Small firms have less internal resources, which makes them more fragile and sensitive to macroeconomic conditions. This suggests the need for frequent and real-time monitoring of the small business sector’s health. Previously this was difficult due to a lack of appropriate data. This paper fills this important gap by developing a new Intuit QuickBooks Small Business Index that focuses on the smallest of small businesses with at most 9 workers in the US and the UK and at most 19 workers in Canada. The Index aggregates a sample of anonymous QuickBooks Online Payroll subscriber data (QBO Payroll sample) from 333, 000 businesses in the US, 66, 000 in Canada, and 25, 000 in the UK. After comparing the QBO Payroll sample data to the official statistics, we remove the seasonal components and use a Flexible Least Squares method to calibrate the QBO Payroll sample data against official statistics. Finally, we use the estimated model and the QBO Payroll sample data to generate a near real-time index of economic activity. We show that the estimated model performs well both in-sample and out-of-sample. Additionally, we use this analysis for different regions and industries.
    Keywords: Small Businesses, Employment, Index, Entrepreneurship, Job Creation, Turnover
    JEL: J23 J63
    Date: 2023–06–23
  14. By: Bachtrögler-Unger, Julia; Balland, Pierre-Alexandre; Boschma, Ron; Schwab, Thomas
    Abstract: Technological capabilities vary substantially across European regions. Combining these diverse sets of capabilities is crucial to develop the technologies necessary to master the green and digital transition. However, collaboration between regions is sparse today. To increase inter-regional cooperation, linkages that spur the development of green and digital technologies must be identified. In this study, we provide an overview of inter-regional collaborations already in place and map new opportunities for these between regions. A special emphasis is placed on potential collaborations between economically leading and lagging regions. Our results provide new impetus for policy designs that strengthen regional innovation capabilities and cohesion across Europe’s regions.
    Keywords: Regional diversification; Relatedness; Technological capabilities; European Union; Europe; Cohesion
    JEL: B52 H54 O33 R11
    Date: 2023–04–04
  15. By: De Marzo, Giordano,; Mathew, Nanditha,; Sbardella, Angelica,
    Abstract: Our study investigates the heterogeneity of skill demands within occupations, the firm activities that are associated with demand for broader skill sets, and the firm characteristics that are related to particular skills and different combinations of skills. We use a unique matched database of firm- level data and online job vacancy data for a developing economy, namely, India. Employing a multi-level machine learning technique and an innovative skill taxonomy, we identify and categorize skill requirements of firms. Our empirical analysis provides robust evidence of significant heterogeneity in skill requirements across firms within the same occupations. Additionally, we show that firms demanding diverse skills differ from their counterparts. Firms that are competitive in international markets, as well as those that are more innovative, require digital skills and specific combinations of digital and other skills. Our findings highlight the crucial role played by firms in defining the changing nature of work.
    Keywords: employment creation, skill, platform workers
    Date: 2023
  16. By: Moore, Bradley Adam
    Abstract: This essay aims to investigate the significant role that entrepreneurship, marketing, Internet of Things (IoT), and artificial intelligence (AI) play in the transformation of startups into global enterprises. It explores how the integration of these four domains can drive innovation, enhance customer engagement, optimize operations, and foster business growth. The essay also discusses the challenges and opportunities that arise when leveraging entrepreneurship, marketing, IoT, and AI in the context of scaling up a business. Through a comprehensive analysis of relevant literature and case studies, this essay provides valuable insights into the interplay between these domains and their impact on the success of startups in the global marketplace.
    Date: 2023–06–05
  17. By: Tanweer, Syeda Zainab; Shah, Muhammad Saud; Nabi, Agha Ammad; Mukhi, Aftab Ali; Ahad, Muhammad
    Abstract: This research aims to assess the impact of accelerator programs on the innovation performance of participating firms, particularly emphasizing the roles played by peers, mentors, and investors. The study delves into how connections with others may inspire creative actions and propel new businesses forward. The data was collected using a standardized survey questionnaire, and the results were organized using statistical analysis. The results show that accelerator programs substantially affect company success, with mentors and investors showing a real correlation but peers showing no relevant association. These findings demonstrate the robust correlation between accelerator programs and successful outcomes for businesses in Pakistan. However, the results show that peers are not the only factor in determining the success or failure of a firm. Although startups play a critical role in bringing new technologies to market and stimulating economic development, their success is often predicated on drawing on the expertise of others outside the company.
    Keywords: Incubator Initiatives, Development Outcomes, Peers, Mentors, Investors; Pakistan.
    JEL: M13 M16
    Date: 2023–03–12
  18. By: Alessio Tomelleri; Anna Gloria Billé
    Abstract: Government subsidies have been one of the main policy instruments used to deal with the economic effects of the COVID-19 pandemic. This study investigated the impact of spatial dependence on the take-up rate of local government subsidies in 2020. It focused on a specific sub-population of firms hit particularly hard by the pandemic: micro-enterprises. Since microdata on this type of firm is rare, we focused on a representative survey of local firms in Trentino, a province in the north of Italy. The sample is linked with administrative balance sheet data up to 2019, providing a wide range of covariates to control for the characteristics of eligible enterprises that did and did not apply for COVID-19 aid. The methodology focused on using a spatial probit model that properly provides local direct, indirect and total marginal effects to investigate the spatial heterogeneity of revenues with respect to the probability of receiving a provincial subsidy.
    Keywords: Public Subsidies, Take-up, Micro-enterprise, Spatial probit, Spatial dependence, COVID-19
    JEL: H25 H71 L25 D22 D25 L20
    Date: 2023–07
  19. By: Laurent Frésard (Universita della Svizzera italiana; Swiss Finance Institute); Loriano Mancini (Universita della Svizzera italiana; Swiss Finance Institute); Enrique J. Schroth (EDHEC Business School; CEPR); Davide Sinno (Universita della Svizzera italiana; Swiss Finance Institute)
    Abstract: This paper explores the relation between firms’ growth and efficiency. To measure it, our approach treats productive efficiency as a deliberate choice made by firms, as opposed to taken as given by the firm and estimated as a residual. In our model, firms choose capital and labor jointly with effort to make these inputs more productive. Fitting the model to the data, we obtain granular estimates of firms’ unobservable efficiency and find that young firms prioritize growth, while older firms focus more on efficiency. Over time, firms tend to shift their emphasis towards efficiency. Among young firms, those that pursue high growth tend to achieve higher markups, but also face a greater risk of failure. Our analysis sheds light on the factors that influence firms’ growth and efficiency strategies and their implications.
    Keywords: Efficiency, growth, short-term effort, investment, estimation
    JEL: D25 G31 O40
    Date: 2023–03
  20. By: Cockx, B.; Desiere, Sam
    Abstract: Firms without paid employees account for up to 80% of all firms, but only a small minority ever hires. This paper investigates the relationship between labour costs and the decision to hire a first employee and become an employer. Leveraging a unique policy in Belgium that permanently reduced the labour cost of the first employee by 13%, we find that the number of new, first-time employers jumped by 31% immediately following the reform. The elasticity of the probability to hire the first employee with respect to the labour cost is −2.39 [95% CI: −3.45, −1.25].
    JEL: D22 H25 J08 J23 L26 M13
    Date: 2023–06–06
  21. By: Choi, Junseok (Korea Institute for Industrial Economics and Trade); Lee, Juneyoung (Korea Institute for Industrial Economics and Trade)
    Abstract: In response to the rapidly changing industrial landscape amid the Fourth Industrial Revolution (4IR), net-zero race, and aging industrial infrastructure, the Korean government has designated 15 outdated industrial complexes as Smart-Green Industrial Complexes (SGICs) since 2019. Despite the Yoon Suk-yeol government has declared its commitment to SGIC policy continuation, a dearth of research has produced only scant evidence of the policy’s continued implementation. As three years have passed since the introduction of the SGIC policy, it is now time to analyze its effects and establish a strategy to enhance SGICs nationwide. This study analyzes the necessity of the SGIC policy from microeconomic and environmental-economic perspectives. Smartization, in theory, helps firms maximize productivity and profits by enabling them to produce more goods and services at the same cost (or less), contributing to the Pareto-optimization of the economy as a whole. Furthermore, SGICs provide tenant firms with energy-saving infrastructure, contributing to emissions reductions and allowing firms to share in the benefits of agglomeration. Firms at designated SGICs experienced a 6.13 percent increase in output, a 6.88 percent increase in exports, and an 8.91 percent increase in labor productivity from the first quarter of 2019 (Q1 2019) to Q2 2022. Our propensity score matching (PSM) and difference-in-difference (DID) analysis also confirms (at a significance level of one percent), that small and medium-size (SMEs) tenant firms subject to independent auditing generated roughly 2.5 percentage points more in average annual revenue and one percentage point more in operating margin (that is, the operating income-to-revenue ratio) than comparable enterprises not located in SGICs. Based on these findings, we propose a network structure for the efficient operation of SGICs, including not only the 10 leading industries the Korean government actively encourages joining SGICs but also other SGIC-related projects at public agencies. Our menu of necessary policy support measures presents a roadmap for the evolution of SGICs along with key performance indicators (KPIs) for effective performance management at these complexes. Finally, we recommend that the Korean government match the investments made by cluster unions from the Industrial Complex Environment Improvement Fund to encourage private sector investment.
    Keywords: industrial complexes; industrial clusters; industrial agglomeration; agglomeration effects; Industry 4.0; smart industrial complexes; smart-green industrial complexes; productivity; Pareto-optimization; network effects; industrial complex policy; Korea
    JEL: D22 D23 D24 D25 L52 L53 L59 O31 O38
    Date: 2023–01–31

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